2026 (7) TMI 515

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.... A. Whether on the facts and circumstances of the case and in law the Hon'ble ITAT is correct in deleting the disallowance of market research expenses of Rs. 7,36,00,000/- made by the AO and confirmed by the Ld. CIT(A) without appreciating the fact that the market research expenses are for brand building, increasing brand awareness and identifying strategy for specific target audience which has enduring benefit in the forthcoming years and therefore should be treated as capital expenditure? 2. The Assessee e-filed its Return of Income on 25th September 2008 declaring its income at Rs. 10,88,06,290/- under the normal provisions of the Income Tax Act, 1961 (IT Act). Thereafter, on 30th March 2010 the Assessee e-filed a revised Retur....

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....ore the expenditure in this regard has to be treated as capital in nature. To challenge or take objection to the Draft Assessment Order, the Assessee did not choose to take the DRP route, and therefore, a final Assessment Order dated 3rd February 2012 was passed by the Assessing Officer. 3. Being aggrieved by the final Assessment Order, the Assessee preferred an Appeal before the CIT (Appeals). On the issue of market research expenses, the CIT (Appeals) upheld the order of the Assessing Officer and held against the Assessee. Being aggrieved by the order of the CIT (Appeals), the Assessee therefore approached the ITAT. The ITAT, for the reasons recorded in the impugned order, held that the expenses incurred by the Assessee towards market ....

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....course of business of the Assessee to understand the consumers, their habits, reactions, and feedback on the products. The Tribunal noted that for this purpose the Assessee had appointed various agencies in relation to various market research activities and accordingly incurred such expenditure to assist the Assessee in improving marketing strategy which ultimately results in higher sales and consequently higher profit for the business. The Tribunal also noted that this was an expenditure which was recurring in nature, and for A.Y.2001-02 to A.Y.2006-07, the Revenue had allowed these very same expenses being revenue in nature while framing the assessment under Section 143(3) of the IT Act. The Tribunal also, in support of its conclusion ....